SHERMAN OAKS, Calif.-One small CU with fewer than 1,000 members is getting help in adding more services, thanks to a pilot program being championed by CU*Northwest.
In February of this year, $5.6-million Sunkist Employees FCU went live with the CU*Base core solution from CU*Northwest, a core processing system offered on a wholesale basis by Michigan-based CU*Answers. It is the same core system used by 1st Valley Credit Union in San Bernardino, Calif., where Greg Stockdale is CEO. Stockdale, who has helped lead the way in the collaborative effort, told SEFCU CEO Olivia Bautista during a June meeting in his office, "You can't save all the small credit unions, but I can save one at a time, starting with this one."
With Stockdale's help, the 969-member Sunkist is now in process of implementing share drafts, bill pay, home banking and other ancillary services that members expect a financial institution to offer. "It's hard for a small CU to get through everything they have to do in a day, much less pursue other products," said Stockdale. "We've been down that road and understand the perils and pitfalls. Everything looks like a bank to her."
Though members are asking for more services, "We're not sure what it all encompasses," Bautista said. "The first question we get from prospective members is about checking accounts. That is what we're working on right now, learning how share draft accounts are set up. Having a mentor credit union gives me that opportunity."
"The whole thing with share drafts is to have a relationship with the organization that is going to clear the drafts," said Stockdale. "I accelerated the pace on that for her. Otherwise I doubt that she would have gotten share drafts. It really requires commitment of the data processor and the sponsored credit union. Once you get most of the products out, once they're in place, it's really not that big a deal. But they have to make sure that this is going to work for them."
Having common processing software has been one key to the success of the collaborative effort between Sunkist and its mentor CU. "Our technology has built-in tools that allow credit unions to collaborate with one another easily," said CU Northwest CEO Greg Smith.
Stockdale said the results so far with the small credit union pilot initiative validates the model. "Based on my experience with Olivia, this initiative is 100% viable." said Stockdale. "She has really thrown herself into it. You have to follow up. You can't sit back and let some larger credit union hold your hand."
CU*Northwest's Greg Smith was more qualified in his assessment. "The pilot was just that," he said. "We're not sure it's going forward."
A potential roadblock in expanding the effort has to do with software fees, since Sunkist got its processing system for about one-fifth of the normal fee, according to Smith. He said all the vendors gave Sunkist a steep discount, including the CUSO CU*Answers.
The program, designed to give small CUs leading-edge tools they normally could not afford, has six prerequisites: that the CU have five or fewer work stations; that it currently offer no transaction accounts such as share drafts; that it have a mentor or sponsor; that it be committed to doing the work of conversion to the new product offerings; that it provide ongoing training in self-service tools at no cost to members, and that it have a five-year contract with the CU*Norwest online CU*Base environment.
At press time Stockdale and Smith were scheduled to meet at the end of June to discuss how, when, and whether, to go forward with the next phase of this particular effort to save small credit unions.